All About “Income Declaration Scheme 2016” (IDS 2016)

All About “Income Declaration Scheme 2016” (IDS 2016)

The Income Declaration Scheme, 2016 incorporated as Chapter IX of the Finance Act 2016 provides an opportunity to all persons who have not declared income correctly in earlier years to come forward and declare such undisclosed income(s).

Under the Scheme, such income as declared by the eligible persons, would be taxed at the rate of 30% plus a ‘Krishi Kalyan Cess’ of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, thereby totalling to 45% of the income declared under the scheme.

The scheme shall remain in force for a period of 4 months from 1st June, 2016 to 30th September, 2016 for filing of declarations and payments towards taxes, surcharge & penalty must be made latest by 30th November, 2016. Declarations can be filed online or with the jurisdictional Pr. Commissioners of Income-tax across the country.

i) No Relief or Condonation of Delay for Tax Payment under IDS 2016: CBDT

CBDT Denies any Relief to Declarants by way of Condonation of Delay for Payment of Installments of Tax under Income Declaration Scheme (IDS) 2016. (CBDT Order dt. 28 Mar. 2017)

CBDT has notified ‘Income-tax (34th Amendment) Rules, 2016 and has inserted new IT Rule 8AA(3) for determination of holding period of a capital asset declared under IDS 2016 (i.e. to be taken from date of acquisition as per registration deed or 1 June 2016), as under:

iii) Issuance of Form 2 for Declarations under IDS 2016 (without PAN) by 25 Nov. 2016

It has come to CBDT’s notice that some declarations under IDS, 2016 received manually without PAN are still pending for issuance of Form -2 due to non-availability of PAN. CBDT has pushed IT Officials on 18 Nov. 2016 to ensure that issuance of Form-2 in all such cases, in accordance with instruction No. 10 of 2016 dt. 28.09.2016 is done by 25 Nov. 2016.

iv) CBDT Clarification on e-issuance of Form-2 under IDS 2016 as valid mode

The CBDT has decided that e-issuance of Form-2 on the email address mentioned in Form-1 by the declarant shall be considered as a valid mode of service in respect of the electronically filed declarations under the IDS 2016. Besides, the CBDT has clarified the issue of Search & Seizure post 1 June 2016 and the relevant instructions of CBDT for field formations. (CBDT Instruction No. 11 of 2016 13th October, 2016)

The CBDT has clarified that where a declarant is not having PAN can file manual declaration under IDS 2016, subject to quoting Acknowledgement number of PAN Application. (CBDT Instruction No. 10 of 2016 dt. 28 Sept. 2016)

The CBDT has extended the working hours on 28, 29 & 30 Sept. 2016 in all jurisdictions of Income Tax Deptt., to facilitate taxpayers for filing printed copies of the declarations in prescribed forms under IDS 2016, as under:

CBDT Instructions/ OM dt. 15 Sept. 2016 F. No. 225/233/2016-ITA II

CBDT Press Release dt.27 Sept. 2016

CBDT Instructions/ OM dt. 28 Sept. 2016 F. No. 225/233/2016-ITA II

viia) CBDT Clarifies Undisclosed Income under IDS 2016 from Cash Sale of Assets

The CBDT has issued instructions/ clarification reiterating the provisions contained in section 183(2) of the Scheme that where the income chargeable to tax is represented in the form of investment in any asset, the fair market value of such asset as on 01.06.2016 shall be deemed to be the undisclosed income. (CBDT Instruction No.9 of 2016 dt. 27 Sept. 2016)

The CBDT has advised CITs to take a lenient view on pending issues of an Assessment Year when a valid declaration is made under IDS 2016 for identical issues of another Assessment Year. (CBDT Order u/s 119 of Income Tax Act, 1961 dt. 21 Sept. 2016)

The CBDT has issued instructions clarifying whether a declaration under the Scheme can be filed for an assessment year for which the proceedings under section 142(1)/ 143(2)/ 148/ 153A/ 153C were pending as on 31.05.2016 but the said proceedings have been completed. (CBDT Instruction No. 8/2016 dt. 15 Sept. on Eligibility for Declarations under IDS 2016)

The CBDT has asserted that no further clarifications on the Income Declaration Scheme 2016 shall be issued and that the Scheme closes on 30.09.2016, i.e. extension of the scheme is out of question. (CBDT Press Release dt. 2 Sept. 2016)

xii) CBDT Extends Due Date for Acknowledgement of Declarations under IDS in July 2016

The CBDT vide Order dt. 12 Aug. 2016 has extended the time limit for issuance of acknowledgment in Form-2 from 15 days to 30 days in respect of the declarations filed under the Scheme in the month of July, 2016. (CBDT Order dt. 12 Aug. 2016)

CBDT clarifies that Taxpayers response to Income Declaration Scheme (IDS) 2016 is growing steadily, in view of the fact that certain sections of the press have been speculating on the taxpayers’ response to the currently on-going Income Disclosure Scheme (IDS) 2016 over the last couple of days, which is not based on any statements/ facts issued by the Income Tax Department/ CBDT. (CBDT Press Release dt. 15 Sept. 2016)

xiv) Income Declaration Scheme (Third Amendment) Rules, 2016

The CBDT has notified Income Declaration Scheme (Third Amendment) Rules, 2016, amending the provisions relating to determination of FMV of Immovable Properties based on stamp duty value, as under:

xvi) Income Declaration Scheme 2016 (1st June 2016 ~ 30th Sept. 2016)

The CBDT has launched the ‘Income Declaration Scheme 2016’ which shall remain in force for a period of 4 months (1st June, 2016 to 30th Sept. 2016) for filing of declarations. Salient features of IDS 2016 are as under:

i) The scheme shall apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16 or earlier.

ii) Where the declaration is in the form of investment in assets, the Fair Market Value of such asset as on 1st June 2016 shall be deemed to be the undisclosed income under the Scheme. However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.

iii) Assets specified in the declaration shall be exempt from Wealth tax.

iv) No Scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations.

v) Immunity from prosecution under the Income-tax Act and Wealth Tax Act is also provided along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of asset to actual owner within the period specified in the Rules.

vi) Non-payment of total taxes, surcharge & penalty in time or declaration by misrepresentation or suppression of facts shall render the declaration void.

vii) The circumstances in which the Scheme shall not apply or where a person is held to be ineligible are specified in section 196 (Chapter IX) of the Finance Act, 2016.

viii) Non declaration of undisclosed income under the Scheme, will render such undisclosed income liable to tax in the previous year in which it is detected by the Income tax Department. Other penal consequences will also follow accordingly.

xix) PM Modi Speaks on IDS 2016 in Mann ki Baat

Hon’ble PM Modi in his radio programme, Mann ki Baat aired on Sunday, 26th June, 2016, advised the countrymen about the benefits of declaring hitherto undeclared assets under this Income Declaration Scheme scheme. He asked people to declare their undisclosed income and assets, making it clear that this is the last chance to avoid problems that will follow after the window of opportunity closes.

xx) Information gathered under Income Declaration Scheme 2016- Sharing prohibited by CBDT for Income Tax Officials

The CBDT vide Notification No. 56/2016 dt 6 July 2016 has prohibited sharing of any information gathered by Income Tax Officials under Income Declaration Scheme 2016, as under:

xxi) Relaxation of time schedule for making Payment of Tax in 3 installments under the IDS 2016

Taking into consideration the practical difficulties of the stakeholders, the Government has decided to revise the time schedule for making payments under the Scheme. The CBDT has made amendments in the time schedule for making payment of tax in 3 installments under the Income Declaration Scheme 2016, as under:

The CBDT vide Notification 60/2016 dt. 20 July, 2016 has made Amendments to Form 1 Notified with Income Declaration Scheme Rules, 2016. Now the declarants can revise their declaration under Income Declaration Scheme 2016 using Revised Form 1 (IDS 2016), as under:

xxiv) Appointed Dates under Income Declaration Scheme 2016

xxv) CBDT Clarification on Jurisdictional Principal Commissioner or the Commissioner

CBDT has clarified that the jurisdictional Principal Commissioner or the Commissioner, as the case may be, who exercises jurisdiction u/s 120 of the Income-tax Act, 1961, as notified by CBDT from time to time over such declarant, shall be the Principal Commissioner or the Commissioner as referred to in section 186 of the Income Declaration Scheme 2016 to whom declaration under 183 of that Scheme is to be made

Above notification has related instruction at the bottom of Form 3, i.e. The form is to be furnished on or before the dates notified for making payments under the Scheme viz. 30.11.2016, 31.03.2017 and 30.09.2017.

Regarding Income Declaration Scheme-2016, after paying first installment of taxes (25%) in Oct. 2016 and uploading form-3 i have now tried to pay second installment (25%) and upload form-3 again. However after logging into the e-filing portal, i find that the IDS tab is no longer available and hence there is no way of uploading Form-3. In fact the IDS tab has been replaced with PMGKY tab. I contacted IT helpline 180042500025 today and informed them of my predicament. What is the solution?

Due to oversight a challan under IDS for Rs.3,04,000 was paid instead of Rs.3,40,000 and thus there is a short payment of Rs.36,000 and the last date of payment is over on 30.09.2017. It was a bonafide error. What will be the fate of declaration? Whether any opportunity is available to make balance payment now ?